TUI eyes European sale

The TUI Group is looking at a strategic reshuffle that would see its power base shift from the UK towards Germany. Its UK-listed TUI Travel, which handles most of its TUI Tourism, is currently 51 percent owned by the Hanover-based TUI Group.

The move would see the remaining 49 percent share sold to the controlling shareholder, with TUI Travel losing its continental operations.Should the transfer proceed, its German parent would cancel €1bn in debt that Tui Travel is due to pay back by 2011, according to the Financial Times.
The transfer is aimed to better integrate TUI’s hotel and cruise businesses, already controlled from Germany, with TUI Travel.
TUI Travel was created in 2007 when TUI merged its travel operations with First Choice Holidays to form Europe’s largest holiday operator.
TUI is thought to be drawing up options for its travel interests after completing the sale of a majority stake in container shipping company Hapag-Lloyd at the end of March, which bolstered its coffers by €1.6bn.
However as a result of the sale, TUI Travel shares have climbed more than 25 percent in the past three weeks.
This share price rise and lower-than-expected immediate returns from the Hapag-Lloyd (€1.6bn rather than €2bn hoped for) forced Michael Frenzel, TUI chief executive, to explore other ways to boost its tourism operations.
TUI confirmed to the FT that it was looking at options to raise its tourism operations but stressed that Frenzel had said that it could take many months to decide about changes.
By delaying, TUI Travel shares could come off recent highs, due to the deteriorating economy, boosting the chances of a full takeover.